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Friday, April 25, 2014

How much should I earn?

Posted by Robert on October 29, 2012

This is a guest post by Robert, who lives in Calgary and worked as a financial adviser before retiring at age 35. He is married, has three kids and has returned to school with the goal of eventually living and working overseas.

It’s been snowing for a few days now in Calgary and it seems that winter is finally here. Luckily, I already changed the tires on our minivan. That was a small project consisting of driving to my father-in-laws house, using his air compressor and power tools and changing the tires myself. He bought all the tools so that he could do it properly, but still avoid spending two hours or more for an auto mechanic to change his tires (twice a year). He’s a physician, so his time is quite valuable. Whatever the mechanic would charge to change the tires ($30?) is nothing in comparison to the “cost” of having to drive in and wait around.

For me, the calculation isn’t so simple. I’m not working, so I can’t simply divide how much I make (in $) by how much time I spend working (in hours) to come up with $/hr. These days, I’m involved in a number of different projects (besides raising kids) including volunteer work, political action, writing and university courses. These projects each take time, but don’t generate income. My income arrives whether I work or not (assuming the stock market cooperates).

So for me, it makes sense to change my snow tires myself because I have access to the tools and I have the time. Because my schedule is flexible, I am generally able to rearrange my commitments if I want to accept something new. My time has basically no cost, because it’s not really a scarce resource. In reality, I don’t have any more hours in a day or days in a week than other people, I just have more control over what I fit into my time.

Having said that, there’s the constant risk of wasting time. What if I don’t feel like working on something difficult or making progress toward a self-imposed deadline? I could watch a movie instead, or drop in to the library or go grocery shopping. There are no consequences and the only one I’m accountable to for how I spend my time is myself.

So the question is: If I were to get paid to do temporary work, how much should I earn? Any amount is more than the $0 I’m earning right now, so it would all be an improvement. But I’m not willing to just give up my freedom to spend my time how I please. In part, it depends on what type of work I’m doing, whether it’s valuable, skilled work (like financial advice) or work that anyone could do (like my kids shovelling snow for money). In part, I just feel that I’m beyond receiving minimum wage, but I also suspect that I’ll never again earn the hourly rate that I did when I worked full time. Between those extremes, I guess I’d be willing to accept almost any amount, as long as the setting is pleasant.

If you were to take on temporary work or be paid for a project, how would you determine how much you should earn?

Comments

9 Responses to “How much should I earn?”
  1. The German says:

    This is indeed an interesting and important question. I just answer it for me in the way that it depends on the fun at working. Less or no fun – high paying. Lots of fun involved, do it for free !

  2. You’re right that it is about the trade-offs. Pretty complex, but perhaps The German is onto something. Charge whatever the market will bear, but do things you would do for free anyway.

  3. Tara says:

    I am contemplating this very issue myself… how much is my time worth? I guess it will depend on how badly I need the money.

  4. MW says:

    Thoughtful post. I used to think I’d want to do a “fun” job when I didn’t need to earn at the same level anymore.

    Having scaled back to part time (15 hr/wk or so), I am re-thinking that as I am not sure I want to spend my time on a hobby job. The lower paycheque may actually kill my enthusiasm for it. And I don’t like anything enough to go back to full time.

    If I can sustain it, what I do right now gives me the best bang for my time and leaves me plenty of it to be able to do and afford all sorts of other activities.

  5. Canuckguy says:

    Am I missing something here? You have no job, no income but you wonder how much you should earn? You must have a big stash of cash and/or investments to pay the bills or da wife is carrying the load.

  6. Robert says:

    I appreciate the thoughtful comments. I especially like the idea that required income is inversely proportional to enjoyment.

    Canuckguy is funny. I’ve “retired”, but I’m not above occasionally earning income for a project that’s interesting to me.

  7. Jon_snow says:

    Robert, perhaps you have mentioned it before, but does your wife work?

  8. Robert says:

    Jon, I don’t think I’ve mentioned it before. My wife does not work. Currently, we’re both taking Master’s courses at the University of Calgary in Education. She’s a year ahead of me, and I just started this past summer.

  9. mlvideovault says:

    Hi Robert
    Why do you want to run after some $? In your post you are saying that money’s coming in: “My income arrives whether I work or not (assuming the stock market cooperates).”
    So have fun by discovering new things such as using air compressor in a non professional way. The site aircompressor.amazonau.org provides some ideas.

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